Eli Lilly and Company (NYSE: LLY) is a global pharmaceutical company. Eli Lilly's global headquarters is located in Indianapolis, Indiana, in the United States. The company was founded in 1876 by a pharmaceutical chemist, Eli Lilly, after whom the company was ultimately named.
Among other specialties, Lilly was the first company to mass-produce penicillin and today is the world's largest manufacturer and distributor of psychiatric medications.
Eli Lilly and Company, incorporated in 1901, discovers, develops, manufactures and sells products in one business segment, pharmaceutical products. It also has an animal health business segment. The Company manufactures and distributes its products through facilities in the United States, Puerto Rico, and 17 other countries. Its products are sold in approximately 125 countries. The Company’s products include neuroscience products, endocrinology products, oncology products, cardiovascular products, animal health products and other pharmaceuticals. In the United States, Eli Lilly and Company distributes pharmaceutical products principally through independent wholesale distributors, with some sales directly to pharmacies. On July 20, 2010, the Company acquired Alnara Pharmaceuticals, Inc. On December 20, 2010, it completed the acquisition of Avid Radiopharmaceuticals, Inc. On May 28, 2010, the Company acquired the European marketing rights to several animal health product lines divested by Pfizer Inc., as part of its acquisition of Wyeth, Inc.
As of December 31, 2010, the Company’s new molecular entities in Phase III clinical trial testing included BAFF antibody, BI10773, Enzastaurin, GLP-1 Fc, Necitumumab, NERI, Ramucirumab and Solanezumab. On January 1, 2010, its pipeline developments included Axiron, BI10773 and linagliptin, Bydureon-the United States, Bydureon-Europe, Cymbalta, Florbetapir, Liprotamase, Livalo, Necitumumab, Tasisulam and Teplizumab.
Neuroscience products
The Company’s neuroscience products include Zyprexa, Zyprexa Relprevv (Zypadhera in the European Union), Cymbalta, Strattera, Prozac and Symbyax. Zyprexa is used for the treatment of schizophrenia, acute-mixed or manic episodes associated with bipolar I disorder and bipolar maintenance. Zyprexa Relprevv (Zypadhera in the European Union) is a long-acting intramuscular injection formulation of Zyprexa. Cymbalta is used for the treatment of depressive disorder, diabetic peripheral neuropathic pain and generalized anxiety disorder. In addition, Cymbalta, in the United States, is used for the management of fibromyalgia and of chronic musculoskeletal pain due to chronic low back pain or chronic pain due to osteoarthritis. Strattera is used for the treatment of attention-deficit hyperactivity disorder in children, adolescents, and in the United States in adults. Prozac is used for the treatment of depressive disorder, obsessive-compulsive disorder, bulimia nervosa and panic disorder. Symbyax is used for the treatment of bipolar depression and treatment-resistant depression.
Endocrinology products
Endocrinology products include Humalog, Humalog Mix 75/25, Humalog Mix 50/50, Humulin, Byetta, Actos, Evista, Forteo, Humatrope and Axiron. Humalog, Humalog Mix 75/25, Humalog Mix 50/50, Humulin are used for the treatment of diabetes. Byetta and Actos are used for the treatment of type 2 diabetes. Evista is used for the prevention and treatment of osteoporosis in postmenopausal women and for the reduction of the invasive breast cancer in postmenopausal women with osteoporosis and postmenopausal women at high risk for invasive breast cancer. Forteo is used for the treatment of osteoporosis in postmenopausal women and men at high risk for fracture and for glucocorticoid-induced osteoporosis in postmenopausal women and men. Humatrope is used for the treatment of human growth hormone deficiency and n pediatric growth conditions. Axiron is a solution of testosterone, applied by underam applicator, for replacement therapy in men for conditions associated with a deficiency or absence of testosterone.
Oncology products
The Company’s oncology products include Alimta, Gemzar and Erbitux. Alimta is used for the treatment, in combination with another agent, of non-small cell lung cancer for patients with non-squamous histology. It is also used for the treatment of non-small cell lung cancer, and in combination with another agent, for the treatment of malignant pleural mesothelioma. Gemzar is used for the treatment of pancreatic cancer, in combination with other agents, for the treatment of metastatic breast cancer, non-small cell lung cancer, and advanced or recurrent ovarian cancer. Gemzar is also used in the European Union for the treatment of bladder cancer. Erbitux is indicated both as a single agent and with another chemotherapy agent used for the treatment of types of colorectal cancers. Erbitux, as a single agent or in combination with radiation therapy, is used for the treatment of types of head and neck cancers.
Cardiovascular products
Cardiovascular products include Cialis, Effient, ReoPro, Xigris, Adcirca and Livalo. Effient is used for the reduction of thrombotic cardiovascular events, including stent thrombosis, in patients with acute coronary syndrome who have managed with an artery-opening procedure, percutaneous coronary intervention (PCI). Effient is used by patients who are undergoing angioplasty, atherectomy or stent placement. ReoPro is used as an adjunct to PCI for the prevention of cardiac ischemic complications. Xigris is used for the treatment of adults with severe sepsis. Adcirca is used for the treatment of pulmonary arterial hypertension. Livalo is a statin medication for use as an adjunct to diet in the treatment of high cholesterol (primary hyperlipidemia or mixed dyslipidemia). During the year ended December 31, 2010, Livalo was launched.
Animal health products
Animal health products include Rumensin, Tylan, Micotil, Paylean and Optaflexx, Coban, Monteban, Maxiban, Apralan, Surmax, Elector, Comfortis and Reconcile. Rumensin is a cattle feed additive that controls and prevents coccidiosis. Tylan is an antibiotic used to control diseases in cattle, swine, and poultry. Micotil, Pulmotil and Pulmotil AC antibiotics are used to treat respiratory disease in cattle, swine and poultry. Paylean and Optaflexx are performance enhancers for swine and cattle, respectively. Posilac is a protein supplement to improve milk productivity in dairy cows. Coban, Monteban and Maxiban are anticoccidial agents for use in poultry. Apralan is an antibiotic used to control enteric infections in calves and swine. Surmax (sold as Maxus in some countries), is a performance enhancer for swine and poultry. Elector is a parasiticide for use on cattle and premises. Comfortis is a chewable tablet that kills fleas and prevents flea infestations on dogs. Reconcile is used for treatment of canine separation anxiety in conjunction with behavior modification training.
Other pharmaceuticals
The Company’s other pharmaceuticals include Vancocin HCl and Ceclor. Vancocin HCl is used primarily to treat staphylococcal infections. Ceclor is used for the treatment of a range of bacterial infections.
By the beginning of the decade, the company's star antidepressant Prozac had become a major medical, legal, and social controversy. Many reported relief from the sufferings of depression. About two million individuals worldwide had taken the drug by the summer of 1990. However, some said Prozac caused them to become suicidal. Lawsuits were filed and some politicians argued that their opponents were unstable because they took Prozac. Those who thought they were hurt by Prozac formed support groups in several states, while Lilly and the FDA continued to defend the drug's usefulness and safety. Eventually several books were written about the pros and cons of using drugs such as Prozac to treat depression and other mental illnesses.
In 1991, Wood abdicated Lilly's chief executive office and chose Vaughn D. Bryson, a longtime executive, as his successor. Lilly's employees reportedly appreciated Bryson's management style, which was much less formal than that of his predecessor. Unfortunately for Bryson, however, patent expirations, a dearth of new drugs, and general volatility in the pharmaceutical industry combined to thwart his stint at the top. The company lost over 30 percent of its market value during his 18-month tenure. Worse, the corporation recorded the first quarterly loss in its history in the fall of 1992. Wood, who had retained Lilly's chairmanship, orchestrated a boardroom revolt to oust his protégé in 1993.
In June of that year, Randall Tobias was selected CEO and chairperson. Unlike all his predecessors, Tobias was recruited from outside Lilly's employee roster. The former vice-chairman of American Telephone and Telegraph Co. had served on Lilly's board since 1986 and was by his own admission inexperienced in pharmaceuticals. Nonetheless, after just six months at Lilly's helm, Tobias announced a reorganization of the venerable drug company.
His plan included divestment of the profitable, but distractive, Medical Device and Diagnostics Division, through which he hoped to raise $550 million. A cost-reduction program included the elimination of 4,000 employees through early retirement. Tobias planned to use these savings to acquire the distributors needed in a pharmaceutical industry that was increasingly influenced by budget-conscious managed care organizations. In line with this focus, Lilly announced its plan to acquire PCS Health Systems Inc., America's largest pharmacy benefit manager, from McKesson Corp. for $4 billion in mid-1994. Tobias, who had orchestrated AT&T's overseas expansion, also worked to expand Lilly's international sales from their 1993 level of about 39 percent of total revenues.
Tobias's plan also focused Lilly's research and development on five broad disease categories: central nervous system diseases, endocrine diseases (including diabetes and osteoporosis), infectious diseases, cancer, and cardiovascular diseases. In line with these strategic imperatives, Lilly in 1995 released Lys-Pro, a new type of insulin for the treatment of diabetes, in 1995, and Zyprexa (olanzapine), indicated for schizophrenia, in 1996.
In 1996 the FDA approved Lilly's Gemzar as the nation's first drug to treat pancreatic cancer. Two years later the FDA approved using Gemzar for nonsmall-cell lung cancer. According to the company's web site, in 2002 over 85 countries had approved Gemzar and almost 80 percent of U.S. patients with pancreatic cancer used Gemzar.
In 1997 the FDA authorized using Evista to help prevent osteoporosis in postmenopausal women. Evista sales in 2000 of $552 million made it one of the company's major products. Other new products were Humalog, a human insulin analog, and ReoPro, a cardiovascular product discovered and developed by Centocor.
After the U.S. Food and Drug Administration in 1997 eased rules on mass media advertising for prescription drugs, Lilly and others in the pharmaceutical industry increased their spending on TV spots. Lilly spent $7 million in direct-to-consumer (DTC) promotionals in 1999. The following year $46.5 million was spent, mostly for Prozac as the end of its patent protection neared.
Although the evidence was not conclusive, television ads in particular were linked to increasing consumer sales, but perhaps with a hidden cost. "The issues raised by DTC advertising are serious," said health policy researcher Steven Findlay in Marketing Health Services in spring 2000. "They touch upon questions of public health, corporate responsibility, advertising ethics, and consumers' capacity to understand complex medical and pharmaceutical information."
In August 2001 Lilly lost U.S. patent protection for Prozac after a series of legal conflicts. At that point Barr Laboratories gained a six-month exclusive right to make a generic Prozac equivalent. Declining Prozac sales in the fourth quarter of 2001 led to a 14 percent reduction in company revenues. In January 2002 the U.S. Supreme Court rejected Lilly's final patent appeal without comment, which opened the door to several other companies making generic versions of the antidepressant drug. Thus ended a major chapter in Lilly's history.
The same month the federal government settled an investigation of Lilly violating its own privacy policies by releasing email addresses of over 600 Prozac patients. According to the New York Times, the "case is the first the Federal Trade Commission has pursued over suspected unintentional violation of a Web site's privacy policies."
Lilly reported $10.86 billion in net sales and $3.05 billion in net income in 2000, both figures up from $10.0 billion in net sales and $2.72 billion in net income the previous year. There was a significant change in the source of its income. In 1996 Prozac accounted for 34 percent of its net sales, but that declined to 24 percent in 2000. Meanwhile, its newer products (Zyprexa, Evista, Actos, Humalog, Gemzar, and ReoPro) increased to bring in 41 percent of all 2000 sales. Zyprexa, approved for schizophrenia and the acute manic phase of bipolar conditions, in the fourth quarter of 2000 surpassed Prozac as the company's number one selling product, with over $2 billion in 2000 sales. In 2000 the company listed 30 trademarked pharmaceuticals on its web site. A few of those were trademarked by other companies that Lilly worked with in joint operations.
In December 2001 Lilly had several new products that it planned to launch by 2004. They included Forteo to reverse osteoporosis, Cialis for male erectile dysfunction, Atomexetine to treat attention deficit disorder, Duloxetine for depression and urinary incontinence, an olanzipine and fluoxetine combination to fight depression, Alimta to treat a form of lung cancer called mesothelioma, and a PKC beta inhibitor to treat diabetic eye problems. Lilly expected that these and several other products in the pipeline would keep the company prosperous in the years to come.
Principal Subsidiaries: Eli Lilly International Corporation; Eli Lilly Interamrica, Inc.; Eli Lilly de Centro America, S.A. (Guatemala); Eli Lilly Compania de Mexico, S.A. de C.V.; Dista Mexicana, S.A. de C.V.; EPCO; Eli Lilly Industries, Inc.; Eli Lilly and Company (Taiwan), Inc.; CBI Uniforms, Inc. (50%); ELCO Management Corp.; Eli Lilly S.A. (Switzerland); Elanco Animal Health; Sphinx Pharmaceuticals Corporation; Control Diabetes SVC; Lilly ICOS LLC.
Principal Competitors: GlaxoSmithKline; Pfizer Inc.; Novo Nordisk.
OVERALL
Beta: 0.79
Market Cap (Mil.): $44,130.25
Shares Outstanding (Mil.): 1,157.67
Annual Dividend: 1.96
Yield (%): 5.14
FINANCIALS
LLY Industry Sector
P/E (TTM): 8.65 23.10 42.25
EPS (TTM): 13.64 -- --
ROI: 21.40 6.71 1.98
ROE: 39.98 8.36 2.62
Statistics:
Public Company
Incorporated: 1881
Employees: 41,000
Sales: $11.54 billion (2001)
Stock Exchanges: New York Boston Cincinnati NASDAQ Philadelphia Basel Geneva Zurich Tokyo London
Ticker Symbol:LLY
NAIC:325412 Pharmaceutical Preparation Manufacturing; 339112 Surgical and Medical Instrument Manufacturing; 422210 Drugs and Druggists' Sundries Wholesalers
Key Dates:
1876: Colonel Eli Lilly starts making ethical drugs in Indianapolis.
1881: Company is incorporated.
1886: Lilly hired its first scientist, Ernest Eberhardt, to establish one of the first pharmaceutical research and development programs.
1923: Eli Lilly and Company begins selling Iletin, the first commercially available insulin.
1940s:Lilly becomes one of the first companies to begin mass producing penicillin.
1950s:Lilly introduces two important antibiotics: erythromycin and vancomycin.
1960s:Lilly introduces cephalosporin antibiotics and anticancer drugs vincristine and vinblastine.
1971: The company buys cosmetics manufacturer Elizabeth Arden.
1977: IVAC Corporation is acquired.
1978: Cardiac Pacemakers Inc. is acquired.
1980: Company acquires Physio-Control Corporation.
1982: Lilly introduces Humulin, the company's human insulin and the first human-healthcare item made by recombinant DNA technology (genetic engineering).
1987: Eli Lilly sells Elizabeth Arden cosmetics business to Fabergé for $657 million.
1987: FDA approves the use of Prozac for treating depression.
1996: Zyprexa is introduced as a new treatment for schizophrenia.
1998: Company dedicates its new laboratories for clinical research at Indiana University Medical Center in Indianapolis.
1999: Takeda Chemical Industries, Ltd. and Lilly launch Actos, an oral diabetes agent that acts as an insulin sensitizer.
2001: Patent protection for Prozac ends in the United States, opening competition from generic versions.
2002: Lilly becomes the fourth major drug company to offer big discounts for needy patients.
Name Age Since Current Position
Lechleiter, John 57 2009 Chairman of the Board, President, Chief Executive Officer
Rice, Derica 46 2010 Chief Financial Officer, Executive Vice President - Global Services
Deane, Frank 61 2007 President - Manufacturing Operations
Carmine, Bryce 59 2009 Executive Vice President and President - Lilly Bio-Medicines
Lundberg, Jan 57 2010 Executive Vice President - Science and Technology, President - Lilly Research Laboratories
Nobles, Anne 54 2009 Senior Vice President - Enterprise Risk Management, Chief Ethics and Compliance Officer
Armitage, Robert 62 2003 Senior Vice President, General Counsel
Fry, Stephen 45 2011 Senior Vice President - Human Resources and Diversity
Conterno, Enrique 44 2009 Senior Vice President and President - Lilly Diabetes
Mahony, Susan 46 2011 Senior Vice President and President - Lilly Oncology
Peterson, Barton 52 2009 Senior Vice President - Corporate Affairs and Communications
Simmons, Jeffrey 43 2008 Senior Vice President and President - Elanco Animal Health
Tapiero, Jacques 52 2010 Senior Vice President and President - Emerging Markets
Horn, Karen 67 2008 Lead Independent Director
Prendergast, Franklyn 66 1995 Independent Director
Seifert, Kathi 61 1995 Independent Director
Gilman, Alfred 69 1995 Independent Director
Bischoff, Winfried 69 2000 Independent Director
Feldstein, Martin 71 2002 Independent Director
Marram, Ellen 64 2002 Independent Director
Fyrwald, J. Erik 51 2005 Independent Director
Eskew, Michael 61 2008 Independent Director
Oberhelman, Douglas 58 2008 Independent Director
Alvarez, Ralph 55 2009 Independent Director
Hoover, R. David 65 2009 Independent Director
Address:
Lilly Corporate Center
Indianapolis, Indiana 46285
U.S.A.
Among other specialties, Lilly was the first company to mass-produce penicillin and today is the world's largest manufacturer and distributor of psychiatric medications.
Eli Lilly and Company, incorporated in 1901, discovers, develops, manufactures and sells products in one business segment, pharmaceutical products. It also has an animal health business segment. The Company manufactures and distributes its products through facilities in the United States, Puerto Rico, and 17 other countries. Its products are sold in approximately 125 countries. The Company’s products include neuroscience products, endocrinology products, oncology products, cardiovascular products, animal health products and other pharmaceuticals. In the United States, Eli Lilly and Company distributes pharmaceutical products principally through independent wholesale distributors, with some sales directly to pharmacies. On July 20, 2010, the Company acquired Alnara Pharmaceuticals, Inc. On December 20, 2010, it completed the acquisition of Avid Radiopharmaceuticals, Inc. On May 28, 2010, the Company acquired the European marketing rights to several animal health product lines divested by Pfizer Inc., as part of its acquisition of Wyeth, Inc.
As of December 31, 2010, the Company’s new molecular entities in Phase III clinical trial testing included BAFF antibody, BI10773, Enzastaurin, GLP-1 Fc, Necitumumab, NERI, Ramucirumab and Solanezumab. On January 1, 2010, its pipeline developments included Axiron, BI10773 and linagliptin, Bydureon-the United States, Bydureon-Europe, Cymbalta, Florbetapir, Liprotamase, Livalo, Necitumumab, Tasisulam and Teplizumab.
Neuroscience products
The Company’s neuroscience products include Zyprexa, Zyprexa Relprevv (Zypadhera in the European Union), Cymbalta, Strattera, Prozac and Symbyax. Zyprexa is used for the treatment of schizophrenia, acute-mixed or manic episodes associated with bipolar I disorder and bipolar maintenance. Zyprexa Relprevv (Zypadhera in the European Union) is a long-acting intramuscular injection formulation of Zyprexa. Cymbalta is used for the treatment of depressive disorder, diabetic peripheral neuropathic pain and generalized anxiety disorder. In addition, Cymbalta, in the United States, is used for the management of fibromyalgia and of chronic musculoskeletal pain due to chronic low back pain or chronic pain due to osteoarthritis. Strattera is used for the treatment of attention-deficit hyperactivity disorder in children, adolescents, and in the United States in adults. Prozac is used for the treatment of depressive disorder, obsessive-compulsive disorder, bulimia nervosa and panic disorder. Symbyax is used for the treatment of bipolar depression and treatment-resistant depression.
Endocrinology products
Endocrinology products include Humalog, Humalog Mix 75/25, Humalog Mix 50/50, Humulin, Byetta, Actos, Evista, Forteo, Humatrope and Axiron. Humalog, Humalog Mix 75/25, Humalog Mix 50/50, Humulin are used for the treatment of diabetes. Byetta and Actos are used for the treatment of type 2 diabetes. Evista is used for the prevention and treatment of osteoporosis in postmenopausal women and for the reduction of the invasive breast cancer in postmenopausal women with osteoporosis and postmenopausal women at high risk for invasive breast cancer. Forteo is used for the treatment of osteoporosis in postmenopausal women and men at high risk for fracture and for glucocorticoid-induced osteoporosis in postmenopausal women and men. Humatrope is used for the treatment of human growth hormone deficiency and n pediatric growth conditions. Axiron is a solution of testosterone, applied by underam applicator, for replacement therapy in men for conditions associated with a deficiency or absence of testosterone.
Oncology products
The Company’s oncology products include Alimta, Gemzar and Erbitux. Alimta is used for the treatment, in combination with another agent, of non-small cell lung cancer for patients with non-squamous histology. It is also used for the treatment of non-small cell lung cancer, and in combination with another agent, for the treatment of malignant pleural mesothelioma. Gemzar is used for the treatment of pancreatic cancer, in combination with other agents, for the treatment of metastatic breast cancer, non-small cell lung cancer, and advanced or recurrent ovarian cancer. Gemzar is also used in the European Union for the treatment of bladder cancer. Erbitux is indicated both as a single agent and with another chemotherapy agent used for the treatment of types of colorectal cancers. Erbitux, as a single agent or in combination with radiation therapy, is used for the treatment of types of head and neck cancers.
Cardiovascular products
Cardiovascular products include Cialis, Effient, ReoPro, Xigris, Adcirca and Livalo. Effient is used for the reduction of thrombotic cardiovascular events, including stent thrombosis, in patients with acute coronary syndrome who have managed with an artery-opening procedure, percutaneous coronary intervention (PCI). Effient is used by patients who are undergoing angioplasty, atherectomy or stent placement. ReoPro is used as an adjunct to PCI for the prevention of cardiac ischemic complications. Xigris is used for the treatment of adults with severe sepsis. Adcirca is used for the treatment of pulmonary arterial hypertension. Livalo is a statin medication for use as an adjunct to diet in the treatment of high cholesterol (primary hyperlipidemia or mixed dyslipidemia). During the year ended December 31, 2010, Livalo was launched.
Animal health products
Animal health products include Rumensin, Tylan, Micotil, Paylean and Optaflexx, Coban, Monteban, Maxiban, Apralan, Surmax, Elector, Comfortis and Reconcile. Rumensin is a cattle feed additive that controls and prevents coccidiosis. Tylan is an antibiotic used to control diseases in cattle, swine, and poultry. Micotil, Pulmotil and Pulmotil AC antibiotics are used to treat respiratory disease in cattle, swine and poultry. Paylean and Optaflexx are performance enhancers for swine and cattle, respectively. Posilac is a protein supplement to improve milk productivity in dairy cows. Coban, Monteban and Maxiban are anticoccidial agents for use in poultry. Apralan is an antibiotic used to control enteric infections in calves and swine. Surmax (sold as Maxus in some countries), is a performance enhancer for swine and poultry. Elector is a parasiticide for use on cattle and premises. Comfortis is a chewable tablet that kills fleas and prevents flea infestations on dogs. Reconcile is used for treatment of canine separation anxiety in conjunction with behavior modification training.
Other pharmaceuticals
The Company’s other pharmaceuticals include Vancocin HCl and Ceclor. Vancocin HCl is used primarily to treat staphylococcal infections. Ceclor is used for the treatment of a range of bacterial infections.
By the beginning of the decade, the company's star antidepressant Prozac had become a major medical, legal, and social controversy. Many reported relief from the sufferings of depression. About two million individuals worldwide had taken the drug by the summer of 1990. However, some said Prozac caused them to become suicidal. Lawsuits were filed and some politicians argued that their opponents were unstable because they took Prozac. Those who thought they were hurt by Prozac formed support groups in several states, while Lilly and the FDA continued to defend the drug's usefulness and safety. Eventually several books were written about the pros and cons of using drugs such as Prozac to treat depression and other mental illnesses.
In 1991, Wood abdicated Lilly's chief executive office and chose Vaughn D. Bryson, a longtime executive, as his successor. Lilly's employees reportedly appreciated Bryson's management style, which was much less formal than that of his predecessor. Unfortunately for Bryson, however, patent expirations, a dearth of new drugs, and general volatility in the pharmaceutical industry combined to thwart his stint at the top. The company lost over 30 percent of its market value during his 18-month tenure. Worse, the corporation recorded the first quarterly loss in its history in the fall of 1992. Wood, who had retained Lilly's chairmanship, orchestrated a boardroom revolt to oust his protégé in 1993.
In June of that year, Randall Tobias was selected CEO and chairperson. Unlike all his predecessors, Tobias was recruited from outside Lilly's employee roster. The former vice-chairman of American Telephone and Telegraph Co. had served on Lilly's board since 1986 and was by his own admission inexperienced in pharmaceuticals. Nonetheless, after just six months at Lilly's helm, Tobias announced a reorganization of the venerable drug company.
His plan included divestment of the profitable, but distractive, Medical Device and Diagnostics Division, through which he hoped to raise $550 million. A cost-reduction program included the elimination of 4,000 employees through early retirement. Tobias planned to use these savings to acquire the distributors needed in a pharmaceutical industry that was increasingly influenced by budget-conscious managed care organizations. In line with this focus, Lilly announced its plan to acquire PCS Health Systems Inc., America's largest pharmacy benefit manager, from McKesson Corp. for $4 billion in mid-1994. Tobias, who had orchestrated AT&T's overseas expansion, also worked to expand Lilly's international sales from their 1993 level of about 39 percent of total revenues.
Tobias's plan also focused Lilly's research and development on five broad disease categories: central nervous system diseases, endocrine diseases (including diabetes and osteoporosis), infectious diseases, cancer, and cardiovascular diseases. In line with these strategic imperatives, Lilly in 1995 released Lys-Pro, a new type of insulin for the treatment of diabetes, in 1995, and Zyprexa (olanzapine), indicated for schizophrenia, in 1996.
In 1996 the FDA approved Lilly's Gemzar as the nation's first drug to treat pancreatic cancer. Two years later the FDA approved using Gemzar for nonsmall-cell lung cancer. According to the company's web site, in 2002 over 85 countries had approved Gemzar and almost 80 percent of U.S. patients with pancreatic cancer used Gemzar.
In 1997 the FDA authorized using Evista to help prevent osteoporosis in postmenopausal women. Evista sales in 2000 of $552 million made it one of the company's major products. Other new products were Humalog, a human insulin analog, and ReoPro, a cardiovascular product discovered and developed by Centocor.
After the U.S. Food and Drug Administration in 1997 eased rules on mass media advertising for prescription drugs, Lilly and others in the pharmaceutical industry increased their spending on TV spots. Lilly spent $7 million in direct-to-consumer (DTC) promotionals in 1999. The following year $46.5 million was spent, mostly for Prozac as the end of its patent protection neared.
Although the evidence was not conclusive, television ads in particular were linked to increasing consumer sales, but perhaps with a hidden cost. "The issues raised by DTC advertising are serious," said health policy researcher Steven Findlay in Marketing Health Services in spring 2000. "They touch upon questions of public health, corporate responsibility, advertising ethics, and consumers' capacity to understand complex medical and pharmaceutical information."
In August 2001 Lilly lost U.S. patent protection for Prozac after a series of legal conflicts. At that point Barr Laboratories gained a six-month exclusive right to make a generic Prozac equivalent. Declining Prozac sales in the fourth quarter of 2001 led to a 14 percent reduction in company revenues. In January 2002 the U.S. Supreme Court rejected Lilly's final patent appeal without comment, which opened the door to several other companies making generic versions of the antidepressant drug. Thus ended a major chapter in Lilly's history.
The same month the federal government settled an investigation of Lilly violating its own privacy policies by releasing email addresses of over 600 Prozac patients. According to the New York Times, the "case is the first the Federal Trade Commission has pursued over suspected unintentional violation of a Web site's privacy policies."
Lilly reported $10.86 billion in net sales and $3.05 billion in net income in 2000, both figures up from $10.0 billion in net sales and $2.72 billion in net income the previous year. There was a significant change in the source of its income. In 1996 Prozac accounted for 34 percent of its net sales, but that declined to 24 percent in 2000. Meanwhile, its newer products (Zyprexa, Evista, Actos, Humalog, Gemzar, and ReoPro) increased to bring in 41 percent of all 2000 sales. Zyprexa, approved for schizophrenia and the acute manic phase of bipolar conditions, in the fourth quarter of 2000 surpassed Prozac as the company's number one selling product, with over $2 billion in 2000 sales. In 2000 the company listed 30 trademarked pharmaceuticals on its web site. A few of those were trademarked by other companies that Lilly worked with in joint operations.
In December 2001 Lilly had several new products that it planned to launch by 2004. They included Forteo to reverse osteoporosis, Cialis for male erectile dysfunction, Atomexetine to treat attention deficit disorder, Duloxetine for depression and urinary incontinence, an olanzipine and fluoxetine combination to fight depression, Alimta to treat a form of lung cancer called mesothelioma, and a PKC beta inhibitor to treat diabetic eye problems. Lilly expected that these and several other products in the pipeline would keep the company prosperous in the years to come.
Principal Subsidiaries: Eli Lilly International Corporation; Eli Lilly Interamrica, Inc.; Eli Lilly de Centro America, S.A. (Guatemala); Eli Lilly Compania de Mexico, S.A. de C.V.; Dista Mexicana, S.A. de C.V.; EPCO; Eli Lilly Industries, Inc.; Eli Lilly and Company (Taiwan), Inc.; CBI Uniforms, Inc. (50%); ELCO Management Corp.; Eli Lilly S.A. (Switzerland); Elanco Animal Health; Sphinx Pharmaceuticals Corporation; Control Diabetes SVC; Lilly ICOS LLC.
Principal Competitors: GlaxoSmithKline; Pfizer Inc.; Novo Nordisk.
OVERALL
Beta: 0.79
Market Cap (Mil.): $44,130.25
Shares Outstanding (Mil.): 1,157.67
Annual Dividend: 1.96
Yield (%): 5.14
FINANCIALS
LLY Industry Sector
P/E (TTM): 8.65 23.10 42.25
EPS (TTM): 13.64 -- --
ROI: 21.40 6.71 1.98
ROE: 39.98 8.36 2.62
Statistics:
Public Company
Incorporated: 1881
Employees: 41,000
Sales: $11.54 billion (2001)
Stock Exchanges: New York Boston Cincinnati NASDAQ Philadelphia Basel Geneva Zurich Tokyo London
Ticker Symbol:LLY
NAIC:325412 Pharmaceutical Preparation Manufacturing; 339112 Surgical and Medical Instrument Manufacturing; 422210 Drugs and Druggists' Sundries Wholesalers
Key Dates:
1876: Colonel Eli Lilly starts making ethical drugs in Indianapolis.
1881: Company is incorporated.
1886: Lilly hired its first scientist, Ernest Eberhardt, to establish one of the first pharmaceutical research and development programs.
1923: Eli Lilly and Company begins selling Iletin, the first commercially available insulin.
1940s:Lilly becomes one of the first companies to begin mass producing penicillin.
1950s:Lilly introduces two important antibiotics: erythromycin and vancomycin.
1960s:Lilly introduces cephalosporin antibiotics and anticancer drugs vincristine and vinblastine.
1971: The company buys cosmetics manufacturer Elizabeth Arden.
1977: IVAC Corporation is acquired.
1978: Cardiac Pacemakers Inc. is acquired.
1980: Company acquires Physio-Control Corporation.
1982: Lilly introduces Humulin, the company's human insulin and the first human-healthcare item made by recombinant DNA technology (genetic engineering).
1987: Eli Lilly sells Elizabeth Arden cosmetics business to Fabergé for $657 million.
1987: FDA approves the use of Prozac for treating depression.
1996: Zyprexa is introduced as a new treatment for schizophrenia.
1998: Company dedicates its new laboratories for clinical research at Indiana University Medical Center in Indianapolis.
1999: Takeda Chemical Industries, Ltd. and Lilly launch Actos, an oral diabetes agent that acts as an insulin sensitizer.
2001: Patent protection for Prozac ends in the United States, opening competition from generic versions.
2002: Lilly becomes the fourth major drug company to offer big discounts for needy patients.
Name Age Since Current Position
Lechleiter, John 57 2009 Chairman of the Board, President, Chief Executive Officer
Rice, Derica 46 2010 Chief Financial Officer, Executive Vice President - Global Services
Deane, Frank 61 2007 President - Manufacturing Operations
Carmine, Bryce 59 2009 Executive Vice President and President - Lilly Bio-Medicines
Lundberg, Jan 57 2010 Executive Vice President - Science and Technology, President - Lilly Research Laboratories
Nobles, Anne 54 2009 Senior Vice President - Enterprise Risk Management, Chief Ethics and Compliance Officer
Armitage, Robert 62 2003 Senior Vice President, General Counsel
Fry, Stephen 45 2011 Senior Vice President - Human Resources and Diversity
Conterno, Enrique 44 2009 Senior Vice President and President - Lilly Diabetes
Mahony, Susan 46 2011 Senior Vice President and President - Lilly Oncology
Peterson, Barton 52 2009 Senior Vice President - Corporate Affairs and Communications
Simmons, Jeffrey 43 2008 Senior Vice President and President - Elanco Animal Health
Tapiero, Jacques 52 2010 Senior Vice President and President - Emerging Markets
Horn, Karen 67 2008 Lead Independent Director
Prendergast, Franklyn 66 1995 Independent Director
Seifert, Kathi 61 1995 Independent Director
Gilman, Alfred 69 1995 Independent Director
Bischoff, Winfried 69 2000 Independent Director
Feldstein, Martin 71 2002 Independent Director
Marram, Ellen 64 2002 Independent Director
Fyrwald, J. Erik 51 2005 Independent Director
Eskew, Michael 61 2008 Independent Director
Oberhelman, Douglas 58 2008 Independent Director
Alvarez, Ralph 55 2009 Independent Director
Hoover, R. David 65 2009 Independent Director
Address:
Lilly Corporate Center
Indianapolis, Indiana 46285
U.S.A.